You got 30 first round interviews, made it to 5 Superdays, and came away with an offer at UBS – which you quickly accepted.

But 5 minutes ago, you just received a call from your recruiter at Goldman Sachs: “another spot opened up” and they’re extending a summer internship offer to you.

So you renege on the UBS offer and go to the “better” bank, right?

Should You Renege?

If you look around online and ask your friends, you’ll see that there’s no consensus on the “ethics” of reneging and whether you should do it.

There are 2 main schools of thought here:

#1: Bankers Are Vengeful and Want to Kill You

This one is more common among senior bankers who spend time recruiting you – they’ve seen cases where someone reneges on an offer and then ends up losing his other offer(s) as a result of angry phone calls from bankers.

The industry is very small, everyone knows each other, and any banker can quickly find out about your move if he wanted to do so.

They would also point out that the upside when reneging is usually much less than you expect.

This upside is significantly better if you’re reneging on an offer in a different industry (e.g. Big 4 accounting) or you’re reneging on a back office offer and moving to the front office.

The upside is also much better if you’re reneging on one full-time offer and taking another one – you’ll probably be there for at least a year or two, whereas with internships there are no guarantees.

The Potential Downside

The worst-case scenario: your would-have-been-employer calls around and finds out where you accepted, then they notify that bank and you instantly lose both your offers.

Oh, and of course you won’t be able to recruit again at the bank you reneged on.

If you relied on on-campus recruiting and the bank you reneged on notifies your school (they will), they may cut off your access to the alumni network, on-campus recruiting, and anything else career-related.

Which is especially bad news if you’re reneging on a summer internship offer and taking another one.

The Blacklist?

So what about the legendary “Blacklist” that banks maintain to tell them who reneged on offers?

Individual banks may have such a list, but rumors about a universal list are heavily exaggerated.

It’s not because bankers are “nice” or because they “forgive” you – it’s because banks and HR departments tend to be poorly organized.

There is some risk of reneging on an offer following you around for awhile but most of the potential downside will be in the near-term.

Will Any of This Happen to You?

That’s the fun part about reneging on an offer: you have no way of knowing.

Maybe you’ll tell a VP when he’s already having a bad day, and he’ll take out his anger on you; or maybe you’ll catch an MD in a good mood and he won’t sink your career with a few phone calls.

The risk of bad things happening is reduced if you’re reneging on an offer in a different industry or from a significantly different firm (e.g. tiny 2-person boutique vs. bulge bracket).

But there’s always some risk, no matter what type of move you’re making.

When NOT to Renege

Since the downside is so high and so difficult to predict, there are many cases where reneging makes no sense:

Bulge Bracket to Bulge Bracket – This is just stupid, even if one is “more prestigious.”

Middle-Market / Boutique to Middle-Market / Boutique – See above.

Internship Offers – Bad idea because you’re not guaranteed a full-time offer and you could be destroying your FT recruiting chances.

Larger Firm to Smaller Firm – This really makes no sense and will make you look silly to everyone involved.

When You Might Consider Reneging

There are some cases where it makes more sense:

Boutique / Middle-Market to Bulge Bracket – This one is actually still quite risky, especially if they’re in the same location – but it does make more sense than the other possibilities above.

None of these is a “slam dunk” – each one is still risky, but they’re at least worth considering.

How to Do It

So you’ve decided to renege on your offer – how do you do it, when do you do it, who do you tell, and what do you say?

How to Say It

Keep it very brief and to the point – you’ve received an exciting opportunity elsewhere and have to take it or you’d be kicking yourself later.

Don’t lie, but don’t tell the whole truth either.

Do not tell them where you’ve accepted the other offer – if they ask, just say the industry it’s in (“finance”) and maybe the location.

If you’re really accepting an offer elsewhere, don’t lie and say you’re reneging for “personal reasons” – that will come back and make you look even worse.

Use the phone rather than email – email is just too impersonal and at least if you call, you may not completely burn your bridges.

You want to do this as soon as possible rather than waiting until 2 weeks before you start, unless you really want to make enemies.

Who to Tell

At the minimum, call the recruiter at the firm you’re reneging on and maybe speak briefly with other bankers you interviewed with there.

There’s no reason to tell your school or to tell all your friends – this is not something you want to openly advertise.

Should you tell the firm you’re accepting the offer with that you reneged elsewhere?

My view is that you should never accept an offer or even start interviewing without telling a firm you have accepted an offer elsewhere first.

This just reduces the potential downside: some firms will get really, really angry if they find out you reneged elsewhere, while other places don’t care.

But as long as they know what you’ve done before they give you an offer or before they even start interviewing you, there isn’t much to be angry about.

Special Cases

There are a few special cases here worth addressing:

Deferred or “Downgraded” Offers

Is it “better” if you renege on a deferred offer (e.g. you start 2 years from now rather than next year) or a downgraded offer (you interviewed for the front office but were transferred to the back office)?

No, not really, because most of the downside is in the near-term.

The risk may be slightly reduced here, but it’s not that much different.

Cultural Differences

The advice above applies to recruiting practices in the US, but not every country in the world does it the same way.

In some regions it’s more common to go around interviewing even when you have offers lined up or accepted.

So you need to ask people at your school and anyone you know in the industry and see what common practice is where you live.

Actual Personal Reasons

Maybe you have actual, legitimate personal or family circumstances that have led you into reneging on an offer… they can’t get annoyed at that, right?

No, sorry – once again it doesn’t matter what your reasoning is.

But in this case you do have another option: instead of reneging on the offer, just push for a deferred offer instead. That lets you keep your hard-earned offer and keeps you from burning bridges.

Banking to Completely Different Industry

If you decide to join the Peace Corps at the last-minute, no banker will call the organization to sink your career and prevent you from saving the world.

In this case it’s less about ruining your entire career and more about limiting your options if you ever want to go back into finance in the future.

To Renege?

The problem with reneging on an offer is that the downside outweighs the upside and there’s no way you can predict how bad the downside will be.

There are some cases where it makes sense to consider, but 90% of the email I get on this topic is of the “Should I renege on my offer at one bulge bracket to move to another one?” variety, and that just doesn’t make sense.

So if you have a dramatically better offer and you need to renege to accept it, proceed with caution.

Comments

I’ve accepted a valuation job offer with an accounting firm (not directly through my school but through alumni referral). A few people at school know that I received an offer, but I didn’t admit to anyone that I’ve accepted it. (They might now believe it but I don’t know for sure.)
Now I just received and accepted a campus interview with a well-known middle market investment bank through the school. Both are full-time positions with start date in the summer.
I got a bit nervous and kept thinking what if the school or a classmate or the firm where I accepted an offer finds out what I’m doing. Should I be worried? What could possibly happen if someone finds out? Should I just quietly turn down the interview and pretend nothing has happened and stop interviewing elsewhere? My goal is really to do IB in the first place. I’d appreciate your advice on this.

I wouldn’t be worried but I’d be discrete about it, because if someone on campus/your career centre finds out you may risk losing two roles. If you do plan to turn down the interview, you don’t need to worry too much and pretend nothing happened. However, if you plan to interview with the second firm, I’d be very quiet and discrete and see where the interviewing process takes you. If you really want to do IB, it maybe wise to interview with the bank to see what your options are and decide later should you get an offer at the bank.

With summer internships; and an aim to try and spin the experience to apply for IB graduate programs, would it be worth reneging on a commercial banking position for a private wealth management offer (both at large banks)?
Thanks

We don’t recommend reneging if possible. However, since you’re talking a paid vs. unpaid role, and a MM vs. a small boutiques, I’d say it may not be a bad idea to do so especially given financial reasons.